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Bombardier’s CSeries jam a dramatic early test for Trudeau

The “unbelievable pressure” to bail out the ambitious jetliner developed by a company seen as one of Canada’s crown jewels includes the memory of the Arrow cancellation in 1959.

Click for an album of Bombarder aircraft. The ambitious CSeries promises to be more fuel-efficient than the competition. But fuel prices have lately dropped, and Boeing and Airbus have long dominated the market for medium-to-large jetliners. (CHRISTINNE MUSCHI / REUTERS)

Bombardier's Canadair Regional jet has sold nearly 2,000 copies and probably ranks as Canada's most successful aviation project financially. It was an offshoot of the Challenger business jet, which itself required considerable government money to bring to market. Canadair was, for a time, a crown corporation, before being sold to Bombardier. (the canadian press)

Bombardier has produced hundreds of specialized "water bomber" aircraft to fight forest fires, designated CL-215 and CL-415. The "C" reflects the design's origins as a product of Bombardier's predecessor company, Canadair. In much of the world these airplanes are referred to shorthand as "Canadairs." (GEORGES BARTOLI / Reuters)

In the 1960s Canadair developed the innovative CL-84 that could take off vertically like a helicopter, and then tilt its wing to fly normally. The VTOL (vertical take-off and landing) design was not brought to market, but demonstrated a capability later perfected in the Bell-Boeing V-22 Osprey developed for the U.S. military.

The Canadair Forty-Four was a heavy-lifting cargo aircraft with an unusual swing tail. In the 1960s a stretched version without the swing tail was used by Iceland's Lofteidir to pioneer low-cost trans-Atlantic passenger service. Military adaptations built for Canada's Armed Forces were designated the CC-106 Yukon and CP-107 Argus.

A British Overseas Airways Canadair North Star sits on the tarmac at Hong Kong, probably in the early 1950s. The made-in-Canada airliner's design was adapted from the U.S. Douglas DC-4, and powered by Rolls Royce engines such as were used on the military Spitfire during the Second World War. Trans-Canada Air Lines (now Air Canada) and Canadian Pacific operated North Stars on far-reaching routes from Canada to Europe, Japan, and even Australia.

By Andy BlatchfordThe Canadian Press

Tues., Nov. 3, 2015

OTTAWA—Shortly after Justin Trudeau takes power, he will face an early, major test on whether to bail out Bombardier.

The prime minister-designate will have to confront what could be a billion-dollar decision in Quebec, his home province and a region where his Liberals made significant gains in last month’s election.

The Quebec government, which committed $1 billion to help Bombardier complete its delayed and costly commercial jet program, wants Trudeau to pitch in. The struggling airplane and train manufacturer employs thousands in the province.

Trudeau’s decision whether to help one of Quebec’s “crown jewels” will loom as he’s sworn in Wednesday, the same day he introduces his cabinet.

“There’s going to be unbelievable pressure on this government — unbelievable pressure to do something for Bombardier,” said Ian Lee, an economics professor at Carleton University’s Sprott School of Business.

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“Of course, nobody wants to see yet another crown jewel go down.”

On Monday, Quebec Economy Minister Jacques Daoust applied more pressure, saying he would ask the new Liberal government for a “significant” financial contribution for Bombardier.

Daoust, a provincial Liberal, noted that he thought Ottawa made the right decision a few years ago when it joined the Ontario government in helping that province’s automotive industry.

“And the aerospace industry here is just as important,” he said.

“It would be normal if there was a federal contribution to share the risk.”

Media reports have suggested Quebec wants between $350 million and $1 billion from Ottawa, but Daoust refused to say Monday how much he would be looking for.

The Trudeau government is poised to create controversy regardless of its decision, particularly with other Canadian industries and companies facing cash crunches of their own.

Saskatchewan Premier Brad Wall tweeted a link Monday to a news story about Quebec’s Bombardier request and noted that Western Canada’s troubled energy sector hadn’t asked for a bailout despite the stress of low oil prices.

Wall wrote that the energy industry just wants to move its products to tidewater.

Bombardier, meanwhile, already has outstanding federal loans.

“Since 1966, Bombardier received $1.3 billion in repayable contributions and has repaid $543 million as of Dec. 31, 2014,” Industry Canada spokeswoman Stefanie Power wrote in an email.

When asked about Bombardier, a spokesman for the Liberals said in an email that the party is focused on the government’s transition.

“We are following the issue closely and a decision will be made after (Wednesday),” Dan Lauzon wrote.

Casting long shadows over the CSeries troubles are the memories of the Avro Arrow cancellation by John Diefenbaker — widely seen as a debacle — and the halting earlier of the less-known Avro Jetliner program.

The Jetliner, developed in the late 1940s, was one of the first-ever passenger jets. It was to have been built in Malton near Toronto, but the project was cancelled as Avro shifted to military production for the Korean War. Like the CSeries, the designs for these aircraft were basically complete when the programs were called off.

The federal government’s eventual decision on the CSeries is expected to send a signal on how Trudeau plans to approach industrial policy and the provinces, said Tyler Chamberlin, an associate professor at the University of Ottawa.

He expects Trudeau to toss a lifeline to Bombardier because the incoming prime minister has been vocal about his desire to work more closely with the provinces.

Chamberlin, however, cautioned that the Liberals should be careful to avoid making any hasty decisions.

“It’s just sort of catching them before they can really get their feet underneath them,” said Chamberlin, who works at the Telfer School of Management.

“The Liberals are so fresh, I mean heck they’re not even really the government quite yet, are they?”

Factoring in the tricky political implications of the decision, Lee predicted that it’s very likely the government will provide some kind of relief for Bombardier.

But from an economic perspective Lee warned that injecting public cash into the company would probably be a bad move.

“I think any government — I don’t care what party they’re from — should walk very, very carefully into this,” said Lee, who believes Ottawa should only provide the funds if the company changes the decision makers at the top.

He said Bombardier faces internal challenges of being led by officials who overreached, guiding the company beyond its comfort zone of making smaller regional jets.

With the bigger CSeries commercial jets, it will find itself competing at a new level with massive global players like Airbus and Boeing, he added. Their competing designs are much older, especially Boeing’s 737, a much-evolved version of a platform that first flew first flew fifty years ago. But the Airbus and Boeing aircraft are well-entrenched as workhorses with airlines around the world.

“It’s unfortunate but that’s what happens on what I like to call the Serengeti of capitalism,” Lee said of Bombardier’s CSeries challenge.

“On the Serengeti, the big, hungry, lean lions eat the weaker animals. That’s just the way it is.”

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